Spot gold traded near $3,906 an ounce on Monday, up about 0.8% from Friday's $3,875.84 close, after Friday's slide of roughly 3.5% to a one-year low. The rebound came as Brent crude fell more than 3% to below $110 on reports that Iran and Qatar continued talks to end the war, easing inflation concerns and slightly reducing the case for a December Federal Reserve rate hike.
Still, the recovery may be short-lived. Markets are pricing about a 75% chance of a Fed hike in December after the central bank held rates at 3.75-4.00% last week and two officials voted for a hike. This week's calendar is loaded: ISM manufacturing on Monday, U.S. midterm elections and JOLTS on Tuesday, ADP and ISM services on Wednesday, the Bank of England on Thursday, and October nonfarm payrolls on Friday. Economists expect payrolls to show 68,000 jobs after 29,000 in September.
The U.S. midterm elections are a key catalyst. If Democrats win the House and Senate, President Donald Trump's legislative agenda could face tougher hurdles, raising the risk of budget fights, debt-ceiling disputes and even another prolonged government shutdown. The election outcome could also influence foreign policy: if Democrats win by a large margin, Trump may decide to restart the U.S.-Iran conflict, and Tehran has warned it could hit critical civilian infrastructure including oil and gas terminals, refineries, bridges and desalination plants. Such an escalation would likely push crude prices higher, entrench inflation and strengthen the Fed's case to keep tightening.
On the technical side, gold remains in a strong sell-off from the August high near $4,695 to Friday's low near $3,872. Resistance sits at $3,920, then $3,951 and the 50-period EMA near $4,023. Support is seen at $3,869, then $3,828 and $3,793. The RSI near 32 after dipping below 30 suggests the market was oversold into Monday, but the technical bias remains bearish while gold trades below $3,951.
Analyst views are divided. UBS's Giovanni Staunovo still expects gold at $5,000 or higher next year, while Bannockburn Global Forex's Marc Chandler sees a possible move to $3,750-$3,850 and StoneX's Daniel Pavilonis does not rule out $3,000.
For crypto assets, the same macro forces matter. Persistent Fed hike expectations and robust U.S. data could keep pressure on risk assets, while any sustained drop in oil prices may offer a temporary reprieve by easing inflation fears.
